Laura Davis-Taylor, leader of BBDO and Proximity's ShopWork shopper marketing practice, examines the drivers and potential impact of the emerging technology known as Near Field Communication, or NFC. The case for...
Removing the barriers
and in-store commerce
represents one of the
hottest trends in retail.”
– Internet Retailer, January 17, 2012
Are You Ready?
In a recent edition of Harvard Business Review, an article called ‘‘The Future of
Shopping’’ is all about one key theme: ‘‘omnichannel retail.’’
“As it evolves, digital retailing is quickly morphing into something so different that
it requires a new name: omnichannel retailing. The name reflects the fact that
retailers will be able to interact with customers through countless channels—
websites, physical stores, kiosks, direct mail and catalogs, call centers, social
media, mobile devices, gaming consoles, televisions, networked appliances,
home services, and more. Unless conventional merchants adopt an entirely new
perspective—one that allows them to integrate disparate channels into a single
seamless omnichannel experience—they are likely to be swept away.”
The article goes on to basically say that retail is stuck in the proverbial box.
Expectations across every channel are increasing and consumer dissatisfaction is on
the rise and customers want more from every buying experience. They want the best
of online available in-store and want the upsides of stores in their digital interactions.
And they don’t want excuses if it doesn’t happen—they’ll just head elsewhere.
“In today’s environment, information and ideas can flow freely. Retailers who learn
to take advantage of both will be well positioned for success.”
Greasing the skids to the free flow of information and ideas will mean jumping
ahead and embracing technologies that enable it. One is looming. And it’s NFC.
The world doesn’t need another
acronym. We know. But NFC, or Near
Field Communication, represents
much more than a slick tech term that
makes you sound like you’re in the
know—it might just change life as we
For years, we’ve talked about the
potential to one day access anything
you want with a simple tap of a device.
In a nutshell, this is what NFC enables.
By doing so, it’s the perfect bridge
between physical and online worlds—
kind of information highway nirvana.
Yet, it’s the easy, dummy-proof
engagement tool everyone—marketers
and consumers alike—has been
Let’s break it down.
NFC is a sister to RFID.
Both are little microchips that
transmit information wirelessly.
However, where RFID is used
to transmit over a distance of
a few meters (think inventory
tracking, luggage tracking, toll
tags, meters, etc.), NFC is used
at close range for end user
applications that have some
kind of personal identification
attached to it.
It works over a few centimeters
(thus the ‘‘near field’’) and is
very much controlled by the
user. They can either opt to
use it or ignore it.
RFID IS USED TO
A DISTANCE OF
A FEW METERS
NFC IS USED OVER
A FEW CENTIMETERS
FOR END USER
THAT HAVE SOME
KIND OF PERSONAL
ATTACHED TO IT
NFC VS RFID
phone manufacturers have been putting
these guys into cell phones for almost
10 years. We got our first whiff of NFC in
2005 when banks started using them in
credit cards to speed up transactions and
reduce card cloning. Then came ‘‘pay and
go,’’ which let people tap a card against
a reader and get on their way quickly. But
prime time is just around the corner.
NFC chips will soon be incorporated right
into your smartphone’s circuitry. Juniper
Research thinks that about
20 percent of phones worldwide might
have NFC capabilities by next year.
That’s one out of five phones out there,
or 300 million when you do the math.
By 2016, analysts are expecting 550
million of them, and when NFC phones
are prevalent, the tags that talk to them
could one day be as commonplace as
WORLD SHIPMENTS OF NFC-ENABLED CELLULAR HANDSETS
SHIPMENT GROWTH PROFILE – 2011 TO 2014
NFC ENABLED HANDSETS
DATA SOURCE: IMS RESEARCH FEB 2012.
2012 2013 2014
But it’s the commerce opportunity that’s
making NFC the new digital darling. Mobile
payments make life easy. And stuff that
makes life easy usually gets adopted. The
market is growing through the roof and
some seriously big players have a lot to gain
by making it mainstream. The race is on
regarding who’s going to come out on top.
THE GROWING MOBILE PAYMENTS MARKET
DATA SOURCE: HTTP://WWW.GOTTABEMOBILE.COM/2011/07/10/THE-FUTURE-OF-MOBILE-PAYMENTS-AND-NFC-IS-BRIGHT-INFOGRAPHIC/
SALES OF NFC-EQUIPPED PHONES WILL EXCEED $75 BILLION
1 IN 5 CELLPHONES WORLDWIDE WILL USE NFC TECHNOLOGY
NFC TRANSACTIONS ALONE WILL APPROACH $50 BILLION
GOOGLE PREDICTS THAT 50% OF ALL CELL PHONES WILL USE
THE VALUE OF ALL MOBILE MONEY TRANSACTIONS IS EXPECTED
TO REACH $670 BILLION
DIGITAL GOODS WILL MAKE UP NEARLY 40% OF THIS MARKET
ASIA, WESTERN EUROPE AND NORTH AMERICA WILL BE
RESPONSIBLE FOR 75% OF ALL MOBILE PAYMENT TRANSACTIONS
TOTAL MOBILE MONEY
DATA SOURCE: HTTP://WWW.GOTTABEMOBILE.COM/2011/07/10/THE-FUTURE-OF-MOBILE-PAYMENTS-AND-NFC-IS-BRIGHT-INFOGRAPHIC/
NO MENTION OF
SUPPORT FOR VISA,
AND NO MENTION
OF IPHONE SUPPORT
FIRST DATA, AND
VISA AND 14
NO SUPPORT FOR
NO MENTION OF
DISCOVER OR AMEX
$2.00 FEE FOR
USING AN ATM TO
FROM A SERVE
ISIS WAS FOUNDED
AS A COALITION
THE DIGITAL WALLET
IS EXPECTED TO
THE NEXUS 5
4G IS ALREADY
SHIPPING WITH NFC
CHIPS THAT WILL
WHEN IT LAUNCHES
WILL SYNC WITH
TO TAKE YOUR
SAVINGS WITH YOU
AS YOU SHOP
VISA’S 50+ YEARS
CAN SEND MONEY
WILL RUN ON ANY
BY THE THREE
WILL RUN ON MOST
CAN MAKE USE OF
NFC IF AVAILABLE
ISIS IS WORKING ON
A MOBILE WALLET
SYSTEM THAT COULD
CREDIT AND DEBIT
USERS TO PAY WITH
ANY OF THEM
WILL PRIMARILY RUN
ON THE PAYFONE,A
BACKED BY AMEX
No doubt about it, the mobile phone is an indispensable
life tool. Load it up with NFC and it becomes a magic
wand of sorts, letting people chuck out any and every
‘‘card’’—building or hotel access, credit, loyalty, public
transportation or more—and do it all with a tap.
NEAR FIELD COMMUNICATIONS
ALLOWS FOR SIMPLIFIED TRANSACTIONS, DATA EXCHANGE
AND WIRELESS CONNECTIONS BETWEEN TWO DEVICES IN
CLOSE PROXIMITY (THE 1 TO 2 INCH RANGE).
DEVICES WORK THROUGH TAPPING, MEANING USERS DON’T
HAVE TO DO ANYTHING EXCEPT BE WITHIN RANGE.
1-2 INCH RANGE
LOYALTY & MEMBERSHIPS
PHYSICAL ACCESS SECURE PC LOG-ON
TIME & ATTENDANCE
We hear you saying, “But wait, QR codes do that
too!” Not exactly. QR codes are certainly prevalent,
but usage has not been what everyone thought it
would be because, although they’re easy to use,
they are still not ridiculously easy to use. Here’s a
quick comparison of the two (see right).
QR code adoption is much stronger than NFC
for the foreseeable future (largely due to the
Once experienced by consumers, NFC is
going to be highly desired. And if the big guys
get behind it, it will become a standard tool.
It’s easier, potentially ubiquitous and solves
YOU ONLY NEED TO
DOWNLOAD AN APP
ADOPTION IS WELL
OVER 50% OF
(MAINLY BECAUSE OF
EASINESS DEPENDS ON
DEPLOYMENT; THE QR
COULD BE TOO SMALL,
TOO FAR AWAY, LIGHTING
COULD BE OFF, ETC.
THERE ARE OVER 400
QR CODE FLAVORS
OUT THERE AND
NO ONE ACCEPTED
MEANS MANY QR
CODE SCANS REQUIRE
A DIFFERENT APP
MAKE THEM WORK.
TOO MUCH TROUBLE
AND AN APP
ALSO REQUIRES A
TAG OR DEVICE NEAR
FOR THE CONSUMER
AS LONG AS THE NFC
HARDWARE IS PRESENT
THAT’S BEEN ADOPTED
GLOBALLY AND RELIES
ON VISUAL CUES AND
TAP POINTS TO ENGAGE.
THIS REMOVES MAJOR
BARRIERS TO ADOPTION,
MAKING IT CONSISTENT
AND EASY TO USE
IT CAN BE RECOGNIZED
GLOBALLY WITH NO
TOTAL SMARTPHONE USERS
We love to talk about how, in the future, we
won’t be tapping into the digital cloud—we’ll
be living in it. The concept of phygital—the
blending of the physical and the digital—
amps up significantly when NFC hits and we
experience a physical version of the Web.
The nitty-gritty of how it works isn’t rocket
HOW (NFC) WORKS
NFC REQUIRES BOTH AN INITIATOR (ALSO CALLED A
READER OR INTERROGATOR) AND A TARGET.
DATA SOURCE: HTTP://WWW.GOTTABEMOBILE.COM/2011/07/10/THE-FUTURE-OF-MOBILE-PAYMENTS-AND-NFC-IS-BRIGHT-INFOGRAPHIC/
NFC ALLOWS FOR A SIMPLE DATA EXCHANGE BETWEEN
TWO DEVICES BY WAY OF A PHYSICAL TOUCH.
THE INITIATOR GENERATES A RADIO FREQUENCY (RF)
FIELD WITH A RANGE OF ABOUT FOUR CENTIMETERS, AND
THE TARGET PICKS UP THE RF FIELD AND RECEIVES THE
DATA IT CONTAINS.
Kind of like Bluetooth and Wi-Fi, NFC is wireless
that’s ‘‘in your immediate space.’’ To make it work,
a reader (also called an interrogator) emits a small
electric current powered by RFID, which creates a
magnetic field that bridges the space between the
devices—and communication begins. The field is
received by a little coil in one of the devices, or TAGs,
where it’s converted into electrical impulses that
translate it into any kind of information you please
(yep, like a magic wand!).
IMAGE CREDIT: FORBES HTTP://WWW.FORBES.COM/SITES/BRIANCAULFIELD/2012/06/13/HOW-A-SAMSUNG-INTERN-MAY-HAVE-CRACKED-ONE-OF-THE-MOBILE-INDUSTRYS-BIGGEST-PROBLEMS/
IMAGE CREDIT: TAGSTAND HTTP://WWW.TAGSTAND.COM/COLLECTIONS/NFC-READER-WRITERS/PRODUCTS/MINI-USB-NFC-READER-WRITER-ACR122T
SAMSUNG NFC MINI-STICKER
NFC STICKERS AND USB READER
GOOGLE WALLET NFC PAYMENTS
TWEETING A RESTAURANT
IMAGE CREDIT: VANESSA HARTNOLL, CEO & PRESIDENT OF IMPETUS CONSULTING
IMAGE CREDIT: TAP IT NFC MARKETING HTTP://WWW.FLICKR.COM/PHOTOS/NFCMARKETING/6194613634/
NFC just connects chips, and not just
in smartphones, but also in tablets,
appliances, and inanimate stuff like
products, a poster, shirts…pretty much
whatever you dream up. These chips
can go anywhere and be encoded with
almost any message, including animation,
apps and forms.
There are two kinds of NFC tags for
NFC chips: (1) passive ones that use
the energy from the reader to encode
a response; (2) active ones that have
their own power source and zing back a
response with their own electromagnetic
fields. So, one kind just listens and receives
while the other kind talks back and forth
(taking location-based messaging to the next
level, as you can imagine).
In most cases, when you use NFC from
a phone, the user needs to know where
to tap—this clearly identified marker for
NFC is called a TAP point. It’s essential
that TAP points are dummy proof—that
is, easy to spot and understand.
someone taps, they get the information that they
want immediately—and they can also share it easily.
We’ve been searching for years to find something that
lets people ‘‘like’’ a physical product in a store to their
social outlets. This is the ticket.
While the marketing opportunities are huge for
tapping, it’s what’s happening behind the scenes
that really makes us swoon: data capture.
You can’t improve what you can’t measure,
particularly mobile campaigns living as a piece of
a larger marketing effort. When a tap happens, the
NFC chip stores that action with many other data
bits it’s been carrying since its inception. With
this, we have for the first time the opportunity to
close the loop of what is happening from the point
of manufacture to the point of sale. Just think of
those implications for supply chain and inventory
management. Retailers will be able to better control
where stuff is made. It will represent how and when
it’s delivered and to which necessary stores.
Just-in-time management on steroids.
We’ll also, for the first time, have a data and
analytics bridge for shopper behavior between
home, life and store. The phone becomes a
ubiquitous cookie of sorts. Not only will we be
able to better understand the oodles of shopping
path iterations people are creating for themselves,
but we’ll be able to create real-time, intelligent
messages to influence them. Wherever they
are. It’s Clickstream meets mobile stream meets
Brickstream business intelligence!
is that when
IMAGE CREDIT: SERGIO UCEDA
IMAGE CREDIT: HID GLOBAL
We’ll also, for the first time,
have a data and analytics
bridge for shopper behavior
between home, life and
store.The phone becomes
ZOE AT HOME IS SIGNED IN TO HER FAVORITE RETAILER’S
SITE. SHE SEES A DRESS SHE LOVES AND SAVES IT TO
HER FAV’S ON HER APP. (DATA = ZOE’S PROFILE, HER SITE
TRAFFIC BEHAVIOR, LENGTH OF SESSION, AND SAVE A
PROFILE OF THE ITEM, BOTH ON THE SITE AND ON HER
LATER IN THE WEEK, SHE GOES TO THE STORE TO GET SOME
BASICS AND FIRES UP HER APP. SHE SEES THAT SHE HAS THE
DRESS SAVED (THANKFULLY! SHE HAD FORGOTTEN ABOUT IT)
AND HEADS OVER TO CHECK IT OUT. (DATA = ZOE’S PROFILE,
STORE LOCATION, TIME OF DAY)
ON THE WAY TO THE WOMEN’S FASHION SECTION OF THE
STORE, SHE SEES A SUPER-CUTE PURSE ON AN ENDCAP.
SHE SCANS THE «N» TAG TO SEE WHERE IT WAS MADE. A
“FOR YOU ZOE ONLY” ONE-HOUR PROMOTIONAL COUPON
SHOWS UP FOR A GREAT PAIR OF SHOES THAT MATCH. SHE
HITS A BUTTON AND “LIKES” THE PURSE TO HER FACEBOOK
PROFILE AND PUTS IT IN THE CART. (DATA = ZOE’S LOCATION
IN THE STORE, APPROXIMATE DWELL LENGTH AT THE ENDCAP,
EXPOSURE TO THE SHOE PROMO, AND “LIKE” BEHAVIOR, BOTH
ON FACEBOOK AND ON THE RETAIL SITE,AND THE PRESENCE OF
THE PURSE IN HER CART)
SHE LEAVES AND FINDS THE DRESS. SHE SCANS THE N TAG
AND SEES THAT 50+ PEOPLE ALSO LIKED A SIMILAR ONE
(SO CUTE!). SHE “LIKES” THEM BOTH AND PUTS THE FIRST
IN HER CART, BUT HER SIZE ISN’T AVAILABLE IN THE OTHER
ONE. SHE TAPS THE TAG, ORDERS HER SIZE AND COLOR ON
HER PHONE AND SENDS IT TO HER HOUSE. (DATA = ZOE’S
LOCATION IN THE STORE, “LIKE” BEHAVIOR, PURCHASE OF
DRESS #2 AND THE PRESENCE OF DRESS #1 IN HER CART)
SHE’S IN A RUSH NOW, SO SHE GUNS IT OVER TO THE SHOE
SECTION AND FINDS HER SIZE. THROWING THE SHOES IN THE
CART, SHE LEAVES AND GETS HER OTHER NEEDED ITEMS.
(DATA = STORE LOCATION, LENGTH OF STAY IN SHOES, AND
PRESENCE OF PROMOTIONAL SHOES IN HER CART)
SHE CHECKS OUT AND REDEEMS THE PROMOTION FOR THE
SHOES. THE CASHIER IS SUPER-HAPPY AND HELPFUL SO SHE
“LIKES” HER ON AN N TAG AT THE CASH WRAP. SHE WAVES HER
PHONE TO PAY AND HEADS OFF. (DATA = FINAL INFORMATION
ON LENGTH OF STAY, ‘‘LIKE’’ BEHAVIOR ATTACHED TO JANE THE
CASHIER (GO JANE!), AND PURCHASE DATA)
AN NFC ENABLED SHOPPING DATA DIARY
NFC will become a natural part of life everywhere we live. Cafes,
bars/clubs, shopping malls, movie theaters, outdoor, in travel
venues, health clubs…you name it. But clearly, we just love what
it does for shopping.
Right now, NFC is just barely on the retail radar. It’s being used most
for mobile payments because, as mentioned, the POS (point of sale),
mobile carriers, credit card companies and other big transaction guys
are pushing it hard. But this is changing. Retailers are realizing that in
today’s hypercompetitive, Amazon-as-a-showroom environment, it’s
all about experience. And when it comes to shopping, the current
experiences are way too linear.
Shoppers are begging for better digital bridges between home,
life and store. Mobile has opened the door to this. They are
loving the notion of anywhere, anyhow, anyplace and any-price
shopping—and they don’t want to work at it.
This is what makes NFC so titillating for retail. With it, the
opportunities for ‘‘tap and get’’ branded content are wide open.
But it also makes the point of purchase portable. Someone can
shop from a smart poster at a concert, in a subway station, from
a coffee cup or a C-store counter—heck, even someone’s shirt!
All that’s needed is a TAG and a tap.
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MOBILE LOYALTY CARDS
*Juniper Research has revealed that the total redemption value of mobile coupons is projected to exceed $43 billion worldwide by 2016.
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Brands across many categories – including mobile
telecommunications, retail, financial services,
technology and media to name a few – are preparing
for a marketplace where NFC will be widespread
and commonplace. The most innovative brands
are already leading the way by spearheading R&D
investment and breakthrough programs centered on
NFC and its potential to revolutionize the consumer
experience. They realize that being early to the
NFC game may bring untold dividends in terms of
early learnings and future growth. Here, then, is
a snapshot into what some of the more notable
leadership brands are already doing in the space.
While AT&T has not yet officially revealed plans
for NFC integration into their services, it does
offer NFC-enabled products, such as the Galaxy
Nexus, which allows for the use of the Google
Wallet on AT&T networks by downloading an
Android Market app. However, in regards to
potential future developments on the NFC front,
AT&T has most notably played a big part in the
development of Isis, an NFC-based mobile wallet
similar to Google Wallet and Visa’s v.me.
The Isis Mobile Wallet, the brainchild of a
coalition between AT&T, Verizon Wireless and
T-Mobile, is a mobile application that “holds
virtual versions of most things your existing
wallet does—this includes your credit and
debit cards,” according to the official website.
It uses NFC technology to communicate with
“Isis Ready” merchant scanners, enabling the
user to not only use Isis as a credit card, but
as subway passes, loyalty cards and more. Isis
made its debut at this year’s South By Southwest
Interactive, and is scheduled to roll out to pilot
cities Salt Lake City and Austin this summer.
Considering the range of Isis’s capabilities and
the part AT&T played in developing them, it is
expected that AT&T will not only integrate itself
into the NFC space, but also emerge as a true
Historically, Starbucks has been at the forefront of introducing mobile
payment schemes to the marketplace so that its consumers can
seamlessly transact within the shops across its network. Although
NFC technology adoption is forecasted to grow significantly in the
U.S. over the next few years, penetration at current levels is still
low. As a result, Starbucks has focused on a form of mobile payment
that serves as a prelude to NFC in the US.: 2D barcodes. Since its
nationwide release in 2011, the Starbucks Card Mobile App has
enabled customers to use mobile payments in the form of a barcode-
based service, and has received more over 4 million payments thus far.
Despite its slow adoption of NFC payments in the US—which is
primarily due to the low volume of American customers with NFC-
enabled phones—Starbucks has been ahead of the curve in using NFC
technologies internationally. For example, last December, Starbucks
partnered with JiePang, a leading location-based social media service
in China, to promote a rewards campaign built around check-ins to
boost sales at Shanghai Starbucks outlets. So long as 30,000 JiePang
users checked in by the Christmas Day deadline, every customer
who had done so would receive a free drink upgrade. Using posters
with embedded NFC tags, customers could see where the closest
Starbucks location was and check-in there to help contribute to the
collective goal of 30,000 check-ins.
Additionally, in May 2011, Starbucks UK signed a deal with
Barclaycard in partnership with Visa Europe and with French mobile-
carrier Orange to allow consumers with NFC-enabled handsets to use
contactless and NFC mobile payments in their coffee shops. Most
locations in the UK and Ireland will have NFC technologies this year.
IMAGE CREDIT: KAKILAW HTTP://WWW.FLICKR.COM/PHOTOS/75527130@N07/6959466997/
Research In Motion (RIM) views NFC as a big market
opportunity and the company in investing heavily into the
technology’s future. The company has taken on the mission
of aiding the growth and mainstreaming of NFC into the
consumer’s world by offering mobile payment abilities as
well as developing innovative BlackBerry applications. RIM’s
products have been said to be the most widely owned NFC
smartphones in the UK, comprising 80% of handsets and
its goal is to put the NFC technology into every one of their
Four in six smartphones that are Visa PayWave enabled
are BlackBerry phones. In addition, MasterCard recently
approved two BlackBerry models for its own version
of PayWave, called PayPass, which are to be sold by
France-based mobile carrier Orange in Europe and the UK.
Furthermore, RIM has been working with international mobile
carriers, such as Istanbul’s TurkCell and Spain’s Telefonica,
to bring NFC payments to NFC-enabled phones worldwide.
New lines of BlackBerry products, specifically those in the
BlackBerry 7 family which were released in Summer 2011,
also come with NFC applications such as BlackBerry Share
and BlackBerry Tag. BlackBerry Share allows users to tap to
NFC-enabled RIM devices and share app content that then
can be downloaded onto the user’s own device from the
BlackBerry App World store. BlackBerry Tag, on the other
hand, is more suited to sharing content with others, as the
application has the ability to transfer information from RIM
devices to non-RIM, NFC-enabled devices.
IMAGE CREDIT: OFFICIAL BLACKBERRY IMAGES
Visa has been one of the companies at the forefront of NFC
adoption since the technology’s conception. In September
2007, Visa introduced Visa PayWave, one of the first contactless
payment technologies to be offered by a financial institution,
which used RFID technology. As RFID evolved into its newer
sister NFC, Visa, in turn, followed. An NFC iteration of PayWave,
a product of a venture between Visa and Oberthur Technologies,
was introduced at the Mobile World Conference this year.
The technology lets mobile operators and banks deliver the
PayWave application over the air to an NFC handset, and
securely deliver payment account information to smartphones.
In addition, earlier this year, Visa partnered with Intel to
enable smartphones powered with Intel’s Atom Z2460 chip
to use the NFC version of PayWave to pay quickly at retail
points of sale. Four of the six Visa-certified smartphones are
BlackBerry devices (the BlackBerry Bold 9900 and 9760, and
the BlackBerry Curve 9380 and 9360), and the other two are the
Samsung Galaxy S II and the LG Optimus NET.
Furthermore, Visa has stayed competitive in developing a
digital wallet service—similar to Isis and Google wallet—called
v.me, which is expected to handle multiple cards and payment
options through Visa and support NFC in the future.
Lastly, as an official sponsor of the London 2012 Olympic
Games, Visa has partnered on issuing special NFC-enabled
mobile phones - each equipped to use Visa PayWave through
a Visa-branded application – to “key stakeholders and decision
makers,” to use at any point of sale at the Games.
IMAGE CREDIT:TAPIT AUSTRALIA
Clearly some people are smartly testing the NFC waters. But the industry isn’t
looking at full-scale commercial deployments until late 2013 or early 2014, based
on some obvious wild cards—understanding, awareness, security issues, how
quickly NFC-enabled devices are out there, when POS infrastructure becomes
widespread, costs for deployment, and clear and bankable ROI to pay for it, etc.
The barriers beg for a bit more explanation.
Whenever a new technology hits, invariably it’s either security or privacy issues
that emerge as the roadblock. Nothing new here, especially given that NFC has
hooks into money accounts. And although the U.S. is the first country to adopt
payment devices, we are limited to the initial payment technologies out there.
RFID has had hacking challenges in the past, and NFC is trying to lock them down.
But people are still wondering. ‘‘How easy will it be to grab the data from my
phone’s NFC chip and clean me out?’’ There isn’t a clear answer.
NFC chips can be embedded into the guts of the mobile phone or placed on the
phone with a TAG sticker. The problem is that they are only secure for transactions
if they are part of the phone, which is accomplished by embedding the chip via a
Secure Element within the SIM card of the phone.
What is a SIM card?
A Subscriber Identity Module (SIM) card is a portable memory chip used mostly
in cell phones that operates on the Global System for Mobile Communications
(GSM) network. These cards hold the personal information of the account holder,
including his or her phone number, address book, text messages, and other data.
Since all of a user’s data is tied to the SIM card, only it needs to be activated when
the person opens an account with a cell-phone service provider (your mobile
phone carrier). Each card has a unique number printed on the microchip, which
the carrier needs in order to activate the phone. In most cases, the phone’s owner
can go either to the carrier’s website and enter this number in the appropriate tool
or call the service provider directly from another phone to get the phone turned on.
SIM cards are tied to a particular carrier and can only be used with a service plan
from that carrier.
Making It Happen:
Drivers & Barriers
OPERATES ON THE
SUCH AS PHONE
HOLDS THE PERSONAL
INFORMATION OF THE
SUBSCRIBER IDENTITY MODULE
NFC LETS GAMERS PREVIEW
GAMES BEFORE PURCHASING
NFC CONNECTS TO
IMAGE CREDIT: TAPIT AUSTRALIA
IMAGE CREDIT: GED CARROLL
though. Because they are such short range, someone
would have to get really close to you to get to your NFC
device and snag your info. You’d notice if someone
was one to four inches away from you, right?
But the players can also make sure that any pay
transaction has some kind of approval method, the
easiest being making someone plug in a PIN to turn
the NFC feature on. It’s something most of us are
used to anyway—we already like to password protect
our phones and computers.
Another barrier is that the big retailers will have to
upgrade their payment systems to work with NFC
(remember, they have to have bidirectional NFC to
make mobile POS work). There are millions and millions
of POS terminals out there and they work just fine, so
retailers are going to need some serious convincing. We
think payment players will get through this by offering
up incentives, co-marketing/co-investment funds, and
maybe even transaction rates that make NFC a tasty
alternative. The major retailers will jump in first (like
Starbucks) and branded bank brands will grease the
skids. We’ve seen indicators already with contactless
payments (e.g., Visa Paywave, MasterCard PayPass,
Chase Blink, etc.).
MOST NFC ACTIVITY
NFC PHONE PENETRATION
WILL HAVE TO BE USED
EXTENSIVELY TO GET
MERCHANTS WILL ONLY
SPEND IF THERE ARE
HELP JUSTIFY THEIR
FIRST MOVERS, ESPECIALLY
BRANDS, COULD SPEED UP
NEED FOR AWARENESS
RETAILERS AND CONSUMERS
THERE IS CURRENTLY
A CLEAR LACK OF
ADOPTION BY MAJOR SMART
WOULD PROVIDE A MASSIVE
BOOST…AND IT WOULD
DRAG THE NFC ECOSYSTEM
HISTORICALLY THIS IS A
FACTOR, BUT WON’T BE AN
BRAND OPTIONS ARE
NOT AVAILABLE FOR APPLE
SLEDS AND STICKERS THAT
MAKE ANY PHONE NFC
IMAGE CREDIT: TAPIT AUSTRALIA
In the end, it doesn’t matter how many brand behemoths push NFC if the consumer
doesn’t buy in.
History has shown us that when technology does something truly valuable for people,
they will get on board. Sure, we need to get around some barriers here. But the
opportunity for NFC to power up our shopping experiences and create never-before-seen
retail convenience and connections is mind blowing.
NFC is clean, easy, unobtrusive, and brilliantly interactive. It opens up shopper
engagement, data collection, and distribution control. It connects offline and online. And
it makes both information and payment portable. What’s not to love? What marketers and
retailers do with NFC in the next few years is only limited by creativity and imagination.
Tapping is nearing the tipping point. Time to get on board!
The Most Important
NFC Shopping Factor
People will adopt change
quo exceeds the pain of
learning something new.”
Laura Davis-Taylor is the SVP, Managing Director of ShopWork, BBDO and
Proximity’s shopper marketing practice. Focused on helping clients turn
shoppers into buyers amidst today’s ever-changing retail landscape, she has
been creating shopper strategies that bridge home, life and store for over
20 years. Her experience is multi-faceted, ranging across account planning,
Internet marketing, store design and, more recently, next generation retail
Laura believes passionately that good brands do not make promises—they
deliver them. Done right, it is this that builds irrational brand loyalty. With
this philosophy, she has worked with brands such as AT&T, Toyota, Best Buy,
Coke, L’Oréal/Lancôme, Lowe’s, Office Depot, Russell Athletic, Foot Locker
and Unilever. She is an active industry speaker and educator and writes
the retail technology column for Digital Signage Magazine. She recently
joined Google’s Shopper Marketing Agency Advisory Council and her book,
“Lighting up the Aisle: Practices and Principles for In-store Digital Media”, is
the only existing resource for how retail brands can harness technology to
reinvent their in-store experience.
Laura can be reached at firstname.lastname@example.org.
ShopWork is BBDO and Proximity’s proprietary domain practice dedicated to empowering
brands so that they truly understand, reach and meaningfully engage with the active
shopper in-store and beyond. This is undertaken so that consumer journeys those brands
take part in end in a purchase, again and again. We generate important insights around the
many cross-channel shopping behaviors and touch points that most influence or disrupt the
buy, honing in on areas of opportunity. We then create engaging shopper initiatives built to
trigger the right human behaviors—regardless of place or platform.